Separating Legal and Business Roles

Many inside counsel--most of whom also have a role on the business side--strive to preserve their legal advice on the grounds of attorney-client privilege. The privilege serves as the foundation upon which the relationship of trust with our clients is built. It provides our management teams with the assurance that they can explore with their inside counsel the various legal options that are available to them in total confidence.

Should we be trying to protect every document we create? That seems unrealistic in light of the joint legal and business roles that many inside counsel perform.

When do we straddle the fence between business and legal advice? Is this just an imaginary line like the equator? What about documents containing mixed business and legal advice? Most importantly, must we surrender the business functions in which we participate to preserve the attorney-client privilege?

Some basic principles need to be kept in mind. Inside counsel should not be barred from raising the privilege merely because they perform tasks other than providing legal advice. Where an inside attorney has other functions in addition to providing legal advice, the lawyer's role in any particular situation may not be self-evident. The focus should be on the nature of the advice that is given, i.e., whether it is primarily legal or business. Business advice is not protected.

Where counsel negotiates a business transaction, reporting developments in the negotiations will not be protected by the privilege, especially if unconnected to legal advice. Also, the use of inside counsel as a conduit for the transmission of business information does not shield business transactions.

Participation in executive meetings where both business and legal matters are discussed can pose some risks. If the purpose of the meeting is to make a legal decision, the communications between inside counsel and the executive team will be protected. It is advisable to separate any executive meeting into two separate and distinct parts, one where the management team discusses purely business matters and a second part involving only the executive team members who will be deciding the legal course of action. Any memoranda prepared by counsel as to the meeting should be restricted to that portion of the meeting where counsel gave legal advice and management determined a legal course of action.

In order to maintain the confidentiality of a document containing legal advice, it should only be circulated to those with a specific "need to know" its contents. The group of recipients may actually go beyond the management team, to which counsel must give advice and propose a legal course of action for approval. In particular, this group could include those who will be designated by management to implement the policy based on the legal course of action.

At the beginning of an e-mail intended to fall within the privilege, remind recipients that the document is confidential and contains legal advice subject to the attorney-client privilege. The document should clearly indicate that the recipients should neither forward it to anyone nor discuss it with anyone unless they have counsel's permission.

Some education is required here. Management must understand the limitations imposed on the assertion of the privilege, especially as it relates to the dual roles of inside counsel. We also need to understand the federal rules regarding privilege as well as those of the state in which we practice.

With planning, an inside counsel wearing two hats inside a company may be able to continue protecting his or her communication under the privilege. However, inside counsel need to remain realistic concerning the risks that the privilege may not be asserted successfully and any document prepared by the legal department may be discoverable.